MED, Telecom, Vodafone reach RBI agreement

20 Apr 2011

New Zealand’s Ministry of Economic Development (MED) has announced that the government has reached a joint agreement with Telecom New Zealand and Vodafone New Zealand regarding its long-running Rural Broadband Initiative (RBI); in February 2011 the two telcos’ surprise partnership was selected from a shortlist of five consortia to extend the reach of broadband services in rural New Zealand. The government will provide the operators with a NZD285 million (USD224.3 million) grant to assist with the six-year project.

Steven Joyce, Minister for Communications and Information Technology, commented: ‘Not only have we secured an agreement that exceeds the government’s RBI objectives, but we will have 252,000 customers in rural New Zealand getting access to high speed broadband that compares well to urban levels of service and prices. I am confident that we have secured the best deal for creating a step change in broadband services for rural New Zealand’.

According to the MED, the final contracts with Telecom and Vodafone include the following provisions:

• 86% of rural homes and businesses to have access to peak broadband speeds of at least 5Mbps (compared with 20% of rural homes and businesses at present; the RBI objective was 80%);

• The construction of 154 new cell phone towers, and the upgrade of 380 existing cell towers to enable fixed-wireless broadband to rural customers, as well as improved mobile coverage;

• Telecom to extend its existing fibre network by approximately 3,100km, with selected homes provided with the opportunity of fibre-to-the-premises (FTTP) at urban prices;

• An additional 6,200 square kilometres of mobile coverage across New Zealand (making a total of 125,700 square kilometres);

• 700 rural schools to be connected directly to fibre networks, with a further 48 schools given digital microwave radio connections; this will equate to 95% of rural schools getting access to ultra-fast broadband speeds of 100Mbps (the RBI objective was 93%);

• Wholesale prices comparable to urban pricing;

• All competitors to be given access to rural broadband infrastructure on a non-discriminatory basis;

• Telecom to extend ‘urban-like’ fixed line broadband speeds to 57% of rural customers;

• An upgrade path to 4G.

Vodafone CEO Russell Stanners commented: ‘From the outset we’ve believed our proposal, which over-delivers on the government’s RBI objectives, could deliver the most benefit to rural New Zealand. Not only does this deliver broadband access, but rural Kiwis will see a significant expansion of mobile voice, SMS and data coverage’.

Mark Ratcliffe, CEO of Telecom’s network business Chorus, added: ‘Because we’re able to build on significant existing infrastructure, capability and experience we can achieve a whole lot in a very short period of time. Within the first year we will have connected around 500 rural schools to fibre’.

New Zealand, Spark, Vodafone New Zealand